Arm strong, but with a warning

Arm Holdings has sounded a note of caution about electronic goods sales this Christmas, overshadowing a better-than-expected second-quarter where its technology, already dominant in mobile phones and tablets, was licensed for use in more new products.

The Cambridge-based company, whose low-energy processor designs are used by Samsung, Qualcomm and Texas Instruments, sold 29 licences in the quarter, helping pre-tax profits rise 25 per cent to £54m on revenues up 18 per cent at £118m.

Paul Morland, an analyst at Peel Hunt, said the results were "excellent", but with the shares trading at 54 times this year's earnings, they were vulnerable to a set of results that did not meet the market's expectations.